The formula used in the calculations is:
\[ \text{PED} = \frac{(Q_1 - Q_0) / [(Q_1 + Q_0) / 2]}{(P_1 - P_0) / [(P_1 + P_0) / 2]} \]
This calculator computes the Price Elasticity of Demand (PED) using the midpoint formula based on the input values of initial and final prices, and initial and final demands. The Price Elasticity of Demand measures the responsiveness of the quantity demanded of a good to a change in its price.
Let's assume the following:
Calculate the Price Elasticity of Demand:
\[ \text{PED} = \frac{(250 - 200) / [(250 + 200) / 2]}{(700 - 800) / [(700 + 800) / 2]} = \frac{50 / 225}{-100 / 750} = \frac{0.2222}{-0.1333} = -1.67 \]
Therefore, the Price Elasticity of Demand is -1.67.
